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U.S. Dollar: The Trade of the Decade

Dec. 18, 2008 7:08 AM ETUUP, UDN, SPY, DIA, QQQ31 Comments
Mark Caffee profile picture
Mark Caffee
26 Followers

It's official. The greenback is back!

Why would I say that when everyone is calling for its collapse? I mean after Helicopter Ben all but sent the greenback over the edge by cutting the fed funds rate to zero, why would anyone own anything but gold?

The U.S. dollar has been in steady decline since the mid-eighties. And the U.S. currency has been cratering since 2:15 EST on Tuesday, December 16th. Everyone expects the Federal Reserve and Treasury to print the economy out of recession, but this is where I get off the bus. Sometimes the most obvious trades are the most dangerous, and this is a very crowded trade. Commodities and bank stocks are both getting plowed under. If printing money was in play, can someone explain the carnage in commodities?

What about that decoupling trade? You know, the China and India growth story? This will be the decade we find out that we all are very coupled together. Deleveraging is synonymous with deflation, and credit does equal money.

The truth of the matter is that Uncle Ben is the buyer of last resort. But by my simple calculations, he likes to buy on the cheap. This is not a runaway train at all, but a very calculated, systematic and coordinated reversal of a twenty year down cycle in the dollar. Contrary to many experts, the Treasury is NOT highlighting a risk trade. Whatever the Bernanke Fed buys will appreciate in value, and you can take that to the central bank!

The U.S. dollar is taking its spot as the reserve currency. America is coming back riding on the greenback. Many pundits have written off America and its currency, but I challenge everyone to buy the pullback in the dollar.

Has anyone ask Hank Paulson if the U.S. has a

This article was written by

Mark Caffee profile picture
26 Followers
Mark Caffee is the president of Mainstay Financial, a non-profit investment company. Previously, he has operated a broker/dealer servicing property and casualty independent agents. Mark's career in the financial services industry started with Merrill Lynch in 1993. Mark graduated from the University of Florida with a B.S. He graduated with honors majoring in Economics.

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